ESAB Corp Q2 FY2024 earnings call

• Delivered a strong quarter with positive organic revenue growth and improved product mix towards equipment. - Utilized EBX toolkit to achieve record margins and cash flow, lowering net leverage ratio to 1.7x and closed an acquisition. - Highlighted passion for shaping the world through initiatives like partnering with Welder Underground. - Launched new FloCloud product for gas monitoring and analytics, strengthening digital strategy. - Acquired Linde's welding business in Bangladesh, filling geographic gap in Asia and cementing leading position in the region.

ESAB delivered positive organic revenue growth of 1% in the second quarter. Equipment and automation businesses saw high single-digit growth, with cobots achieving double-digit year-to-date growth. Adjusted EBITDA expanded 150 basis points year-over-year to a record 20.1%. In the Americas, organic sales grew 400 basis points, driven by 3% price performance and 1% volume, with adjusted EBITDA margin reaching a record 20.9%. In EMEA and APAC, volume increased by 100 basis points, though European filler metal demand softened, offset by equipment and automation workflow solutions, with adjusted EBITDA margins expanding by 110 basis points to 19.5%.

• Full year sales guidance: flat organic core growth, reflecting moderating developed markets and strength in high-growth markets. - Adjusted EBITDA margins midpoint increased by 50 basis points to 19.5% due to new EBX initiatives, improved product mix, and $5 million additional benefits from restructuring projects. - Adjusted EPS remains unchanged, with cash flow conversion on track. - Net leverage ratio at 1.7x, well-positioned for future growth.

• Softness in developed markets impacting overall growth. - Potential downside risk in certain end markets like auto in Europe. - Economic uncertainties that could affect business performance.

Q: Detail on gas control business performance and Linde Bangladesh synergy prospects?

A: Gas control business strong in industrial, specialty, and medical segments; Linde Bangladesh acquisition fills geographic gap, leveraging established channel and expected to rinse and repeat past success in driving synergies.

Q: Cost side detail and factory consolidation?

A: Benefiting from EBX, net pricing initiatives, and AI/data analytics; $10 million restructuring benefits increased by $5 million, with acceleration of factory consolidation project driving additional $5 million benefit.